Monday, May 22, 2006

And now for something serious

According to my latest issue of Mother Jones, American CEOs make $475 for each $1 earned by the average worker. $475?! I'm willing to concede that CEOs (hopefully) bring more to a company than the average worker, but are they really that much more valuable? The next nearest country is the U.K. where CEOs earn $22 for the average worker's $1.

Also, Bush's tax cuts give a family with two kids earning $1 million an extra $86,722, as compared to a 2-child family earning $50,000 - they get $2,050 back.

And if the minimum wage had risen at the same rate as CEO pay since 1990 the current minimum would be $23.03.

As it stands, a minimum wage earner who works 40 hours a week for 51 weeks a year earns $10,506 before taxes.

And in the let's hear it for hypocrisy category - musicians who took part in the Live 8 concerts received gift bags worth up to $12,000. Let's hope most of them turned them down or otherwise found a way to donate the equivalent dollar amount to an organization actually working to 'make poverty history.'

3 Comments:

Hello. So, first off, let me say, I'm right there with you on the tax cut issue, and the gift bag thing.

The minimum wage thing, I could go either way on. That's a much more complex issue.

But the CEO thing, is goofy, and I think you might have got it wrong:

I haven't ready the latest article in the Jones, but they release the same article with updated numbers periodically. It's normally based off of business week surveys, and those surveys only covered giants like Wall-mart and GE. Anyways, I saw the december 2005 edition where it was 1 431 to one ratio, but essentially the same information.

The thing about this article is that is is for TOP CEOs, not the average CEO.

The average CEO makes around $640K (according to CNN) a year. The average TOP CEO according to that version of the article was making $11.8 million per year, giving the average worker a salary of about $27,400. So assuming the average worker of an average CEO makes the same amount (which is obviously arguable) the average CEO only makes 23.7 times more, not 431.

Honestly, I think they just throw the number out there for shock value, knowing the number will stick even if the context doesn't. If you google "ceo" and "475 times" you'll get 413 entries, and none the links on the front page get it right.

Sigh. Yes, one of my frequent nit-picks with MoJo is lack of citation on their stats. But I still contend that even if the number thrown out here is for shock value, the *comparison* across countries remains important (assuming that the same dubious methods were employed for all the numbers in the table, which seems like a reasonable assumption).

I need to make a correction, the $640K a year for a CEO was just salary. Other compensations bring the yearly earnings of the average US CEO to around $940K a year, currently.

But I don't think you can assume MoJo's rate of 475 for the US and 22 for the UK are measured the same. (Btw, was it the "Perks of Privilege" thing you were looking at?)

If you look at the British Fortune 500 Global companies, the average UK (TOP) CEO was making around 2.1 million in 2004. It's gone up drastically in the last year, I'm just going with whatever google returns on it's front page... Anyways, so if UK workers earned 1/22nd of that, they'd be making just about $95K a year, each on average. That's about twice the real average salary in the UK.

Also, don't get me wrong, there's a lot wrong with the current state of financial inequities in the US, I just think those particular numbers are wrong. =)